NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
…..........................Respondent

Heard on : 8 March 2011

Decided on : 16 August 2011

JUDGMENT

VAN DER WESTHUIZEN J:

Introduction

Combating
crime poses a huge challenge to South Africa and the rest of the
world. The globalised nature of organised crime adds
to the
difficulty. Legislation aimed at the prevention of organised crime
and at the recovery of assets relating to criminal
activities exists
in several jurisdictions.1
International co-operation is essential for the effective
implementation of the legislation.

This
case is about the interpretation of and relationship between two
South African statutes that deal with restraint orders in
criminal
matters. The one, the Prevention of Organised Crime Act2
(POCA), provides for the issue of restraint orders by South African
courts regarding the property of persons against whom criminal
proceedings are pending or about to be instituted. The other, the
International Co-operation in Criminal Matters Act3
(ICCMA), provides for the enforcement in South Africa of restraint
orders that have been issued in the course of criminal proceedings
in foreign states.

This is an application for leave to appeal against a judgment of the
Supreme Court of Appeal.4
The Supreme Court of Appeal dismissed with costs an appeal against a
judgment of the Western Cape High Court, Cape Town (High
Court).5

The
applicants are Mr Alexander Gerhard Falk – a German
businessman – and Falk Real Estate SA (Pty) Ltd (FRSA), a
South African company in which he is the sole shareholder. The
respondent is the National Director of Public Prosecutions (NDPP).

A
restraint order granted in the course of criminal proceedings
against Mr Falk by a court in Hamburg, Germany, was registered
in
South Africa by the Registrar of the High Court (Registrar). The
High Court subsequently issued an order interdicting the
applicants
from dealing with assets in South Africa. The applicants have
unsuccessfully attempted to set aside the registration
of the German
order and the subsequent interdictory order.6

The core issues to be addressed are—

whether
the registration of the foreign restraint order should be set
aside; and

whether
the interdictory order should be rescinded.

These issues raise questions about which of the two statutes –
ICCMA or POCA – is applicable to the registration
and to the
interdictory order and whether the requirements in the relevant
statute for setting aside the registration and the
interdictory
order have been met. Some preliminary questions also require
attention, namely whether a constitutional matter is
raised, whether
leave to appeal should be granted and whether new evidence should be
admitted.

With
these questions in mind, an overview of the constitutional and
statutory framework, an account of the factual and litigation
background and a summary of the parties’ submissions in this
Court are provided. These show how the approach to the issues
raised
has evolved since the beginning of the litigation. Thereafter an
analysis and conclusions follow.

Constitutional and statutory framework

The
determination of this case relies on the interpretation of several
provisions of two complex statutes against the background
of the
Constitution. Thus it is convenient first to set out the applicable
constitutional and statutory framework.

In
South Africa, POCA is the statutory instrument that addresses
organised crime. Its preamble specifies its objectives, namely
to
combat the “rapid growth of organised crime, money laundering
and criminal gang activities” and to ensure that
“no
person should benefit from the fruits of unlawful activities”.

POCA
sets forth a scheme for confiscation orders in Chapter 5. This
Chapter provides for the restraint of the benefits derived
from
crime where criminal proceedings are pending or about to be
instituted. It also provides for confiscation after a conviction
has
occurred. A confiscation order under Chapter 5 is a civil judgment
for the payment of an amount of money based on the value
of the
benefit that the defendant derived from the crime.

Part 3 of Chapter 5 of POCA deals with restraint orders. According
to section 26(1) a restraint order is “an order prohibiting
any person, subject to such conditions and exceptions as may be
specified in the order, from dealing in any manner with any property
to which the order relates.” Under section 26(1) the NDPP may
apply ex parte to a High Court for such an order. Section
26(2) stipulates the kind of property in respect of which a
restraint order may be
made.7
Section 25 outlines when a restraint order may be made.8

Section 26(8) provides that a High Court making a restraint order
“shall”, at the same time, make an order authorising
the
seizure of the movable property concerned. It also provides for
“ancillary orders”.9

The rescission of a restraint order is provided for in section
26(10).10
In terms of section 26(10)(a)(i), the High Court may vary or rescind
a restraint order if it will cause undue hardship to the
applicant.11
Section 26(10)(b) states that the High Court which made the order
must rescind the order when the proceedings against the defendant
are concluded.12
Section 17 details when proceedings in terms of this Chapter are
“concluded”13
and section 24A provides that a restraint order remains in force
pending appeal.14

This Court has had to interpret POCA on a number of occasions. The
primary purpose of Chapter 5 of POCA is not punitive, but
to ensure
that no person benefits from his or her wrongdoing. Its secondary
purpose is to promote general crime deterrence and
prevention by
depriving people of “ill-gotten gains”.15

ICCMA
is the South African statute used to facilitate co-operation with
foreign States16
in matters relating to the provision of evidence, the execution of
sentences in criminal cases and the confiscation and transfer
of the
proceeds of crime.17
It specifically deals with the registration and enforcement of
foreign restraint orders.

Chapter 4 of ICCMA deals with confiscation and transfer of the
proceeds of crime and operates both inwardly and outwardly,
facilitating the enforcement of restraint orders made abroad in
South Africa and vice versa. Section 24 provides for the
registration
of foreign restraint orders. When a request for
assistance is lodged with the Director-General of the Department of
Justice and
Constitutional Development (Director-General), he or she
lodges the order with the Registrar who then registers the order.18
Section 25 states that once a foreign restraint order is registered,
it has the effect of a restraint order made by the High
Court at
which it has been registered.19
A restraint order is defined as an order that has been “made
under [POCA]” and a foreign restraint order as “any
order issued by a court or tribunal in a foreign State in respect of
an offence under the law of that State, aimed at restraining
any
person from dealing with any property”.20

Section 26(1) outlines the circumstances in which the registration
of a foreign restraint order can be set aside by the court
at which
it has been registered, on the application of the person against
whom the order operates. These are if: the order was
registered
contrary to a provision of ICCMA; the court of the requesting State
had no jurisdiction; the order is subject to review
or appeal; the
enforcement of the order would be contrary to the interests of
justice; or the sentence or order in support of
which the foreign
restraint order was made, has been fully satisfied.21

ICCMA
and POCA deal to some extent with the same subject matter, but in
different contexts. ICCMA was enacted two years before
POCA. As
shown above, ICCMA refers to POCA by defining a restraint order as
an order made under POCA. One of the points of contention
in this
matter is how the interrelation between them works.

Two constitutional provisions are especially relevant. Section 39(2)
of the Constitution demands that the interpretation of legislation
must promote the spirit, purport and objects of the Bill of Rights.22
A constitutionally sound interpretation of the two statutes must
avoid an outcome that would amount to arbitrary deprivation
of
property, in contravention of section 25(1).23

Factual and litigation background

Mr Falk was arrested in Germany on 6 June 2003 on charges relating
to the manipulation of the share prices of a German corporation.
One
day before his arrest, the Hamburg Regional Court issued a restraint
order against him.24
The German Federal Constitutional Court subsequently found this
order to be unconstitutional on procedural grounds and because
there
was insufficient evidence to justify the quantum of the order. The
Court referred the matter back to the Regional Court.
On 25 August
2004 the Regional Court issued a second restraint order, authorising
the attachment of assets in the amount of €31 645 413,34.
This amount represented what, at that stage, was considered to be
the gains made by Mr Falk from his alleged criminal actions.

The
German authorities submitted a request to the Director-General for
assistance by South Africa to enforce the German restraint
order.
The order was accordingly registered by the Registrar on 13
September 2004, in terms of section 24(1) of ICCMA.25

The
NDPP furthermore applied to the High Court for interdictory relief,
in terms of section 26(8) of POCA – the “ancillary
order” provision – to prevent Mr Falk and FRSA from
disposing of the assets. On 16 August 2005 Veldhuizen J granted
the
interdictory order.26
Mr Falk was interdicted, in other words restrained, from dealing in
any way with his shares in FRSA, then being held in trust
by an
attorney in Cape Town. Mr Falk and FRSA were also restrained from
dealing with €5.22 million being held in an account
at Standard
Bank of South Africa and with any of FRSA’s other assets,
except in the ordinary course of business.

Meanwhile, Mr Falk’s criminal trial commenced in the Hamburg
Regional Court on 3 December 2004. On 9 May 2008 the Court
convicted
him of attempted fraud, conspiracy to misrepresent the financial
position of a corporation and misstating information
of a
corporation in its annual financial statements.27
He was sentenced to four years’ imprisonment. However, the
Court declined to grant a confiscation order against him. The
prosecution as well as Mr Falk appealed to the German Federal High
Court of Justice (Federal Court); the prosecutors against
the
refusal to grant the requested confiscation order and Mr Falk
against his conviction and sentence.

Back
in South Africa, on 2 June 2008, the applicants approached the High
Court to set aside the registration of the German restraint
order as
well as the order granted by Veldhuizen J and for their restrained
assets to be released. They submitted that the criminal
proceedings
in Germany had been concluded, as the trial court had decided not to
grant a confiscation order against them. The
chapter on criminal
prosecutions in Germany had effectively been closed, they argued.
Thus the registration of the German restraint
order, upon which the
interdictory relief had been granted, should be rescinded in terms
of section 26(10)(b) read with section
17(b) of POCA.28

Opposing
the application, the NDPP contended that the proceedings had not
been concluded. The pending appeals meant that Mr Falk
had not been
finally convicted or acquitted and a confiscation order had not been
finally granted or refused.

The
NDPP submitted that ICCMA, rather than POCA, was applicable as the
German restraint order had been registered under ICCMA.
The question
would therefore be whether it was contrary to the interests of
justice to enforce the order under section 26(1)(d)
of ICCMA.29
Because of the real likelihood that the applicants would dissipate
the assets, it would not be in the interests of justice to
release
the assets, the NDPP argued.

The
High Court (Louw J) stated that although the applicants sought that
the registration of the German restraint order as well
as the
subsequent interdictory relief be set aside, their main focus was on
the latter. The Court found it unnecessary to reach
a firm
conclusion on whether POCA or ICCMA applied. Even if section
26(10)(b) of POCA were applicable, as the applicants argued,
the
interdictory order could not be set aside, in view of section 24A of
POCA, which states that a restraint order remains in
place, pending
the outcome of an appeal.30The High Court held that the purpose of the
legislation was that the status quo be maintained pending the
finalisation of an appeal
against the refusal to make a confiscation
order. If that were not so, the outcome of the appeal could be
rendered nugatory.

The High Court
further found that, on an application of ICCMA, the registration of
the foreign restraint order could in any event
not be set aside
because it was not in the interests of justice in terms of section
26(1)(d). To do so would allow the applicants
to hide or dissipate
the assets.

Thus, the
application was dismissed with costs.

When
the application was heard in the High Court, on 29 and 30 October
2008, the appeals to the Federal Court had not yet been
determined.
On 14 July 2010 the Federal Court dismissed Mr Falk’s appeal
against his conviction and sentence. On 29 July
2010 the Federal
Court upheld the prosecutor’s appeal and referred the
question, whether a confiscation order should have
been granted,
back to a differently constituted chamber of the Hamburg Regional
Court.

In
South Africa the applicants approached the Supreme Court of Appeal.
The matter was heard on 9 September 2010, after the German
appeal
proceedings.31

The
applicants contended that the High Court had erred in its
interpretation of sections 17, 24A and 26(10)(b) of POCA and
specifically
that its interpretation of section
24A was in conflict with section 26(10)(b).32
They submitted that the High Court had ignored
the wording of section 17(b) and (c) of POCA, which provides an
accused with the benefit of an appeal,
but not the State.33The proceedings in Germany were indeed concluded,
they argued. The applicants contended that the continued operation
of the registration
of the German order was also contrary to the
interests of justice under section 26(1)(d) of ICCMA.34

The
High Court’s interpretation was unconstitutional under
section 25(1) of the Constitution,35they argued. It prevents an accused from using
his or her property even though the trial court has not granted a
confiscation
order and thus it authorises the arbitrary deprivation
of property.

The applicants
raised a new point in their application for leave to appeal. The
German restraint order should only have been registered
for €4.2
million, instead of the full amount in the order granted in Hamburg,
as this is the only amount connected to the
proceeds of the crime.
This point related to the specificity of the registered order, they
argued.

The
Supreme Court of Appeal36
declined to set aside either the registration of the German order or
the interdictory order and dismissed the appeal, but advanced
reasons different from those of the High Court. It distinguished
between the registration of the German order and the interdictory
order. The registration of a foreign restraint order does not
convert it into an order of a South African court. It remains a
foreign order and not all of the provisions of Chapter 5 of POCA
apply to it. The Supreme Court of Appeal stated that section
26(8)37
of POCA – the ancillary order provision – applied “with
the necessary changes”. The words “‘a
high court
making a restraint order shall at the same time make an order
authorising the seizure of all moveable property concerned’
must be read as meaning ‘the registration of a foreign
restraint order under the ICCMA requires the high court at which
it
is registered to make an order authorising the seizure’”.38
An application by the NDPP would trigger the making of such an
order.

The
High Court held under POCA that a registered foreign restraint order
remains in force pending an appeal in the foreign jurisdiction.
The
Supreme Court of Appeal found that this interpretation of section
24A of POCA was incorrect. The concern in South Africa
is not with
the foreign order, but with its registration which can be set aside
only under ICCMA, not POCA.39

A
South African court does not have the jurisdiction to rescind an
order of a foreign court. Under POCA a High Court can vary
or
rescind the seizure order or the ancillary order made by it in terms
of section 26(8), but if a defendant wishes to undo the
effect of
the registered foreign restraint order altogether, the remedy lies
not in POCA but in section 26 of ICCMA. That section
is definitive
of the grounds upon which the registration of the foreign restraint
order can be set aside.40

The Supreme Court of Appeal concluded that the question of whether
the proceedings in Germany were concluded is not dispositive
to the
interests of justice analysis under section 26(1)(d) of ICCMA. The
interests of justice test requires a broader enquiry.41
In any event, to find that section 17(b) of POCA meant that no
appeal by the State was possible would lead to an absurdity. As
in
civil proceedings, an appeal by the State concerning the making of a
confiscation order was possible42
and thus the State was not precluded from appealing. The Court
concluded that it was necessary to maintain the restraint order,
as
the protection it afforded would otherwise be lost.43

Submissions before this Court

The
applicants’ attack on the registration of the German order and
the interdictory relief has been changing throughout
the litigation.
Focussing on the rescission of the interdictory order, they submit
that only the court that issues an order in
terms of section 26(1)
of POCA is competent to make a section 26(8) ancillary order because
the provision specifies that ancillary
orders must be made “at
the same time” by the High Court issuing the restraint order.44
Therefore the interdictory order was a “fresh” order in
respect of new property that exactly followed the wording
of section
26(1) of POCA. They conceded that their submission that the
interdictory order was a section 26(1) order was a new
argument not
raised before the High Court.

The
applicants argue that the interdictory order should be set aside on
a proper interpretation of section 26(10)(b) of POCA,
read with
section 17(b).45
The proceedings in Germany were concluded once the Hamburg Regional
Court refused to make a confiscation order.

In
the alternative, they contend that the registration of the German
restraint order should be set aside under ICCMA. On this
point the
applicants, in oral argument, challenged the registration on two
grounds by relying on section 24(2) of ICCMA.46
For a foreign restraint order to be registered, the property must be
“specified”. The German restraint order does
not specify
any South African assets, because it does not mention assets that
can be traced to South Africa. The order specifically
mentions
German bailiffs attaching assets in rem. From the reasons
given by the Hamburg Regional Court one can furthermore draw the
inference that South African assets are excluded,
because the order
in Germany was made specifically to prevent further assets from
being moved outside of that jurisdiction.47

They
also argue that the NDPP had not discharged its burden to prove that
the amount had not already been collected fully in Germany.
They
conceded, during oral argument, that this also was a new argument,
but stated that it was linked to the specificity argument
which had
been raised in their written submissions in this Court and in their
papers before the Supreme Court of Appeal.

The
NDPP submits that the registration of the German restraint order and
the interdictory order made pursuant to it can only be
set aside
under ICCMA. As found by the Supreme Court of Appeal, a foreign
restraint order registered in terms of section 24 of
ICCMA merely
has the effect of a restraint order under section 25 of POCA, but
does not become a domestic restraint order.

The
NDPP argues that the provisions of ICCMA and of Chapter 5 of POCA
must be harmonised. ICCMA modifies Chapter 5 of POCA to
the
following extent: first, there is no need for a judge of the South
African High Court to make a section 26(1) order because
of the
provisions of sections 24 and 25 of ICCMA; second, one of the
effects of registration under ICCMA is that a section 26(8)
ancillary order can be made under POCA. The NDPP concedes that the
applicants’ argument on the wording of section 26(8)
and
specifically the phrase “at the same time” is
semantically correct, but submits that one has to be practical
in
order to bring about a workable interaction between the two
statutes.

The
interests of justice test set out in section 26(1)(d) of ICCMA has
to be applied. It is not in the interests of justice to
set aside
the registration of the restraint order, because the applicant
admitted that he will dissipate the assets. Even if
this Court is
inclined to apply POCA, the NDPP submits, the applicants would still
not be entitled to the relief they seek, because
their
interpretation of POCA is wrong. As section 24A qualifies sections
26(10)(b) and 17(b) of POCA, an order remains in force
pending an
appeal. The proceedings in Germany had yet to be concluded. The NDPP
points out that as the POCA Amendment Act introduced
both sections
26(10)(b) and 24A, it would make sense for these provisions to be
read in concert.

A constitutional matter?

The
questions posed in [6] and [7] above are now addressed. I therefore
consider, first, whether a constitutional matter has been
raised.
Then the questions whether leave to appeal should be granted and
whether new evidence should be admitted are addressed.
Thereafter
the questions whether the registration of the foreign order and the
subsequent interdictory order should be set aside
are dealt with.

This
case concerns the proper interpretation of ICCMA and POCA. This
Court has previously held that the interpretation
of POCA raises a constitutional issue.48
The same must apply to ICCMA, as it too has the potential to
infringe rights, and must be interpreted in the light of the
Constitution.
A constitutional issue is raised.49

Should leave to appeal be granted?

Whether it is in the interests of justice for
this Court to grant leave to appeal depends on a number of
factors.50
Two of the most important ones are the significance of interpreting
the relevant provisions of the legislation and the prospects
of
success.

There
is a live dispute between the parties. Its resolution requires
interpretation of the two statutes in the light of the Constitution.
The issues raised are arguable. It is in the interests of justice
that this Court expresses itself on the matter. Leave to appeal
must
be granted.

Should the new evidence be admitted?

In
its written submissions before this Court the NDPP also seeks the
admission of further evidence. The NDPP submits that one
part
comprises papers that formed part of the record before Louw J in the
High Court which the applicants did not include in
the record before
this Court.51
The rest comprises several supplementary affidavits setting out
facts and clarifying the events that arose after the delivery
of the
High Court judgment on 10 July 2009.52
The NDPP sought admission of these papers before the Supreme Court
of Appeal. The Supreme Court of Appeal provisionally admitted
the
papers, but finally declined to admit them as it decided to
adjudicate the appeal on the basis of the factual situation that
existed when the matter was determined in the High Court.53

The
applicants ultimately did not resist the admission of the further
evidence. It should be admitted because there is neither
opposition
nor prejudice.

The registration of the foreign restraint order

Under
this heading, I address three issues: Which statute applies to the
registration? Was the registration of the German order
valid? And,
should the registration be set aside?

Which statute – ICCMA or POCA?

The applicants’
primary objective is to have the interdictory order set aside.
However, they also attack the registration
of the German restraint
order, because if they succeed and the registration falls away, the
rest will follow. For the purpose
of a proper analysis, however,
three things must be clearly distinguished. These are the restraint
order made in Germany under
German legislation, the registration of
the German restraint order in South Africa in terms of ICCMA and the
order subsequently
granted under POCA by the High Court.

The
registration of the German restraint order took place in terms of
section 24 of ICCMA. ICCMA is therefore applicable to the
registration.

As
held by the Supreme Court of Appeal, the fact that the German
restraint order was registered in South Africa does not make
it a
South African order. It remains a foreign order. A South African
court has no jurisdiction to alter or rescind it. But the
registration of the order by the Registrar in the High Court is a
South African event, under South African law, which can be
set aside
by a South African court. In spite of the somewhat loose terminology
used, I do not understand the applicants to ask
for the German
restraint order to be set aside. Their target is the registration of
that order in the High Court. The registration
could only be set
aside under ICCMA.

Was the registration valid?

In
attacking the validity of the registration of the order, the
applicants argue in this Court that the restrained property was
not
“specified”, as required by section 24(2) of ICCMA, that
the German order did not relate to assets in South Africa
and that
it has not been shown that the amount stated in it had not been
satisfied in Germany.

The
order, as translated into English, does not expressly refer to South
African assets, but rather orders the “attachment
in rem
of the assets of the accused.” It provides neither a specific
location of these assets, nor a definition of the term “in
rem”.54
The order directs German officials to take certain steps to enforce
the order. That is understandable, since it was made by a
court in
Germany. This does not raise doubt about whether it is applicable in
South Africa, though.

The
order itself sets out the reasons why it was granted. These include
a reference to the fact that approximately €12 million
has
already been transferred to South Africa. The applicants claim that
this indicates that the order applies not to South African
assets,
but only to assets remaining in Germany. However, the reasons point
to the opposite, namely the fact that assets have
already been moved
to South Africa indicates Mr Falk’s willingness to dissipate
assets and thus the order must apply to
all of his assets, wherever
they may be.

These
arguments on the validity of the registration of the German order
were not canvassed in the applicants’ founding papers,
but
only in their written and oral argument before this Court. Their
counsel asserted that they were also raised orally in the
Supreme
Court of Appeal. It is essentially a new attack. This Court
is not the appropriate forum to decide it, as it would require us to
act as a court
of both first and last instance and to make a factual
determination. The NDPP did not have the opportunity to reply
properly
to the allegation.

The
validity of the registration was not attacked until long after the
interdictory order had been granted.55
Section 26(1)(a) of ICCMA requires the court at which a foreign
order is registered to set the registration aside, if it is
satisfied that the order was registered contrary to a provision of
ICCMA. The applicants never approached that court with an
application to set aside the registration.

The
applicants should have raised their objections to the validity of
the registration much earlier. As stated in the Notice of
Registration of a Foreign Restraint Order, dated 13 September 2004,
the applicants had 20 court days from the date on which the
registration came to their knowledge to apply to the High Court to
set it aside.56
The applicants’ submission that the German order was not
validly registered must fail.

Should the registration be set aside?

As
the Supreme Court of Appeal found, the only way in which the
registration of the foreign restraint order can be set aside is
on
application to the HighCourt under
section 26(1) of ICCMA.

This
provision mentions five situations in which registration can be set
aside.57Leaving aside the possibility that the order was
registered contrary to the provisions of ICCMA,58discussed earlier, the only question applicable
to this case is whether the enforcement of the order would be
contrary to the
interests of justice.59

The
flip side of the question whether the enforcement of the order would
be contrary to the interests of justice is how the interests
of
justice would be affected by the setting aside of the registration
of the order. The probable dissipation of assets is essential
to
this enquiry. The applicants conceded before the Supreme Court of
Appeal that, but for the restraint, there is a real possibility
that
Mr Falk may dispose of the South African assets in question, as they
maintain he is entitled to do. There was ample reason,
in the
interests of justice, for the registration of the German restraint
order to stay in place while appeal proceedings were
pending in
Germany. To hold differently would defeat the very purpose of a
restraint order.

The
question whether the proceedings against the applicants were
concluded in Germany – raised with reference to section
26(10)(b) of POCA – is also relevant to the interests of
justice enquiry under section 26(1)(d) of ICCMA. It is arguable
that
it would not be in the interests of justice for the registration of
the German restraint order to remain in place after
the conclusion
of the proceedings.

When
the decision of the Hamburg Regional Court was taken on appeal to
the Federal Court, the German proceedings were clearly
not
concluded. A confiscation order could still be granted. This
necessarily flows from the nature of the appeal. The subsequent
referral back to the Regional Court by the Federal Court to decide
on a confiscation order confirms this.

POCA
is of course a South African statute, based on South African law
regarding appeals and reviews and the conclusion of proceedings.
Appeal proceedings in another country may differ from those of South
Africa. For instance, if an accused is acquitted in South
African
criminal proceedings, the State can only appeal in very limited
circumstances.60
If in another country, the State could appeal in wider or different
circumstances, it may be difficult to apply the law of that
country
to a statute that clearly has South African criminal procedure in
mind.

This,
however, is not a question that one needs to grapple with in this
case as the prosecution in Germany appealed not against
an
acquittal, but against the Hamburg Regional Court’s refusal to
grant a confiscation order. An appeal also lies in South
Africa
against a refusal to grant a confiscation order. The granting of an
order amounts to civil proceedings which can be appealed
by both
parties if it is granted or refused.61

Section
17(b) of POCA, which states that proceedings are concluded when the
court convicting the defendant of an offence sentences
the defendant
without making a confiscation order, does not assist the applicants.
As the Supreme Court of Appeal stated, section
17(b) could not apply
only to a court of first instance. Section 13(1) of POCA allows for
an appeal by the NDPP.62
This is further demonstrated by section 24A of POCA, which was
inserted later by the POCA Amendment Act. It states that a restraint
order or ancillary order which “is in force at the time of any
decision by the court in relation to the making of a confiscation
order, shall remain in force pending the outcome of any appeal
against the decision concerned.”63
The applicants’ argument that the proceedings have been
concluded would elevate form above substance, an approach that
our
courts have not endorsed.64

The
applicants have not shown that the enforcement of the registered
order would be contrary to the interests of justice, as required
by
section 26(1)(d) of ICCMA. The application to set aside the
registration cannot succeed. The Supreme Court of Appeal cannot
be
faulted for its finding in this regard.

What does “having the effect” of a domestic order
mean?

Before
the claim for rescission of the interdictory order is dealt with, a
question relating to the registration of both the German
order and
the interdictory order requires attention: what does section 25 of
ICCMA mean by stating that when a foreign restraint
order has been
registered, it shall have the effect of a restraint order made by
the division of the High Court at which it has
been registered?

The
dictionary meaning of “effect” is, inter alia, “[t]he
state or fact of being operative” or “to
come into
force.”65This would imply that once a foreign restraint
order is registered it operates as if it were, for all intents and
purposes, a
domestic restraint order.

If
registration gave the German order the effect of a domestic order,
why did the NDPP obtain the ancillary interdictory order?
Could the
German order, once registered, not have been enforced in South
Africa?

It might well be
that a registered foreign restraint order could, as a self-standing
order, have the effect of a domestic order
and could indeed be
enforced as such. Thus, it would not always be necessary to obtain
an interdict from the High Court, before
the registration of a
foreign restraint order could have practical effect in South Africa.
It is not necessary to reach a conclusion
on this possibility,
though, given the facts of this case.

Section
25 of ICCMA provides a link between ICCMA and POCA. Once a foreign
order is registered and has the effect of a domestic
order, it is
for the purposes of POCA an order under section 26(1) of POCA.
Section 26(8) serves to make the section 26(1) order
more effective.
This may be required where the restraint order itself is not enough,
or requires that the property be seized.
It might also be necessary
that some other kind of ancillary order – for example the
interdictory order in this case –
be granted that “the
court considers appropriate for the proper, fair and effective
execution” of the section 26(1)
order.66
So, if registration of a foreign restraint order gives it the effect
of a section 26(1) order, section 26(8) empowers the court
to grant
ancillary orders that render the registration more effective.

The
NDPP argued that while the registration of the German restraint
order aimed to secure assets in this jurisdiction, it had
no
practical effect until an order was made by the High Court to ensure
that specific assets were restrained. The German restraint
order
does not specify any actual assets in South Africa, but rather talks
more generally about a lump sum that the accused owes
as a result of
his criminal dealings. In contrast, the order issued by the High
Court specifies the assets. Thus, the registration
of the German
restraint order provided the jurisdictional basis upon which an
application could be made by the NDPP to restrain
specific assets in
South Africa.

On
the facts of this case, it is quite clear that the interdictory
relief was essential to the efficacy of the original restraint
order. This is how ICCMA and POCA interact in the circumstances of
this matter.

Should the interdictory order be rescinded?

The
NDPP brought the application in the High Court for the interdictory
order under section 26(8) of POCA.67
It was common cause in the High Court and the Supreme Court of
Appeal that the interdictory order was granted as an “ancillary
order” in terms of section 26(8).68

The
applicants contend in this Court though that the order cannot be an
“ancillary order” under section 26(8) of POCA.
The
language of section 26(8) requires that ancillary orders be made “at
the same time” and by the “High Court
making a restraint
order” under section 26(1).69
The order was granted pursuant to the registration of a foreign
restraint order and not pursuant to a POCA section 26(1) order,
and
in any event was not granted at the same time as the registration of
the German restraint order, so they argue.

The
interdictory order itself does not specifically state under which
provision it was made. Interim relief granted by agreement
against
the applicants after a hearing on the semi-urgent roll on 16 August
2005, however, did state that it was granted in terms
of section
26(8) of POCA.70

Orders
ancillary to the registration of a foreign restraint order will by
necessity not be made at the same time and by the same
High Court
that made the main order, as envisaged in the wording of section
26(8). It is practically impossible. The registration
of a foreign
order by the Registrar is clearly not the same as the granting of an
order by a court. The original order was made
in another country.
POCA was drafted with the practical workings of domestic restraint
orders in mind. Because ICCMA relies on
POCA, the wording of section
26(8) has to be interpreted to allow POCA and ICCMA to be
implemented together.

It is
so that section 26(8) requires that a High Court making a restraint
order “shall at the same time” make an order
authorising
the seizure of moveable property concerned. However, this does not
mean that ancillary orders can never be made after
a section 26(1)
order has been made. To construe section 26(8) in this way would be
too narrow and render the provision practically
meaningless,
especially within the context of the interaction between ICCMA and
POCA. It is well known that the term “shall”,
in
legislation, could mean “must”, but also sometimes
“may”.71
In this case the latter applies. The court granting the section
26(1) order is empowered to grant ancillary relief at the same
time,
but is not prohibited from doing so at a later stage.

The
requirement in section 26(8) that the same court that granted the
restraint order has to grant ancillary relief does not pose
a
problem. Because the foreign order was registered by the Registrar,
and section 25 of ICCMA states that the registration gives
the order
the effect of a domestic order, the court where the foreign order is
registered is necessarily the court that may grant
ancillary relief.

The
Supreme Court of Appeal interpreted section 26(8) in a flexible
manner, in order to render it practically workable as far
as
registered foreign orders are concerned, in accordance with the
objects of ICCMA and POCA. It is however not necessary to
unduly
stretch or alter the wording of the provision. A proper contextual
interpretation of the wording allows for the granting
of ancillary
relief subsequent to the registration of a foreign order.

The
ancillary order is not a section 26(1) order. Indeed, the
registration of the foreign restraint order has the effect of a
section 26(1) order. All that needs to be done is to apply for an
ancillary order under section 26(8) should that be necessary
to
render the section 26(1) order, or the registration, more effective.
The question then is how the ancillary order could be
rescinded.

The
applicants argued that the interdictory order must be rescinded
under section 26(10)(b).72
This section provides that the High Court that made the restraint
order must rescind the order when the proceedings against the
defendant are concluded.73

Section
26(10)(b) cannot be applied to an ancillary order granted under
section 26(8) though. The wording of section 26(10)(b)
clearly
refers to restraint orders only. It can only apply to a section
26(1) order.

As
indicated above, whether the proceedings in Germany had indeed been
concluded – argued by the applicants as a section
26(10)(b)
consideration – is relevant to the interests of justice
enquiry regarding whether the registration should be
set aside under
section 26(1) of ICCMA. It is not relevant to the rescission of the
interdictory order under section 26(10).

Only
section 26(10)(a) is in principle applicable to the rescission of a
section 26(8) order. It applies both to restraint orders
and
ancillary orders. It provides for the rescission of an order if “the
operation of the order concerned will deprive
the applicant of the
means to provide for his or her reasonable living expenses and cause
undue hardship for the applicant”
and if “the hardship
that the applicant will suffer as a result of the order outweighs
the risk that the property concerned
may be destroyed, lost,
damaged, concealed or transferred”. This finds no application
in this case and has not been argued
to do so.

A
case has therefore not been made to rescind the interdictory order
in terms of section 26(10) of POCA. To get rid of the ancillary
relief, the applicants have to set aside the registration of the
foreign order under ICCMA, which would necessarily have the
effect
of nullifying the ancillary order. As indicated, they failed to do
so.

The interpretation of the statutes and the Constitution

The
interpretation of ICCMA and POCA must promote the values that
underlie an open and democratic society based on human dignity,
equality and freedom in terms of section 39(2) of the Constitution
and it may not allow for the arbitrary deprivation of property
in
contravention of section 25(1). The above interpretation represents
a meaningful and workable way of giving effect to POCA
and to ICCMA,
within the context of the objects of the two statutes. It does not
offend the spirit, purport and objects of the
Bill of Rights.
International co-operation in combating crime to protect society is
a legitimate constitutional objective. The
order granted in this
case also does not allow for the arbitrary deprivation of property.
By their very nature, restraint orders
restrain the use of property.

Conclusion

In
summary, the German restraint order was registered in the High Court
in terms of section 24 of ICCMA. Only ICCMA is applicable
to the
setting aside of the registration of a foreign order. The applicants
never approached the High Court where it was registered
to set it
aside on the basis that the registration was not in accordance with
ICCMA, in terms of section 26(1)(a) of ICCMA. The
registration can
also not be set aside in terms of section 26(1)(d) of ICCMA because
the requirements of that section have not
been met. The applicants
have not shown that the enforcement of the order would be contrary
to the interests of justice. In fact,
to set aside the registration
would be contrary to the interests of justice.

The
interdictory relief ordered by the High Court was granted under
section 26(8) of POCA as an ancillary order to the registered
German
order, which had the effect of a South African order, in terms of
section 25 of ICCMA. Section 26(10)(a) of POCA is not
applicable to
the circumstances of this case and section 26(10)(b) does not apply
to ancillary orders.

The
Supreme Court of Appeal therefore correctly dismissed the appeal
against the High Court’s refusal to set aside the registration
of the German restraint order and to rescind the interdictory order
granted by the High Court. The appeal must be dismissed.

Costs

Although
the appeal has failed and the applicants have not been successful in
this Court, they have raised a constitutional issue
of considerable
import. Each party should pay its own costs in this Court.74
There is no reason to interfere with the costs orders made by the
High Court and the Supreme Court of Appeal.

Order

The
following order is made:

The
application for the admission of further evidence on affidavit is
granted.

For the
Respondent: Advocate AM Breitenbach SC and Advocate KS Saller
instructed by the State Attorney, Cape Town.

1See
for example: the Proceeds of Serious Crime Act 19 of 1990 in
Botswana; the Prevention of Organised Crimes Act 5 of 2010 in
Kenya;
the Prevention of Organised Crime Act 29 of 2004 in Namibia; the
Serious Offences (Confiscation of Proceeds) Act 8 of
2001 in
Swaziland; the Proceeds of Crime Act 25 of 1991 in Tanzania; section
981(a)(1)(C) of 18 USC 1996 (as amended by the Civil Asset
Forfeiture Reform Act of 2000) in the United States; the Proceeds of
Crime Act 2002 in the United
Kingdom; section 462.33 of the Criminal
Code RSC 1985 c C-46 in Canada; the Proceeds of Crime Act 85 of 2002
in Australia; the
Criminal Proceeds (Recovery) Act 8 of 2009 in New
Zealand; the Karnataka Control of Organised Crime Act 1 of 2000 in
the Karnataka
State of India; and the Maharashtra Control of
Organised Crime Act 30 of 1999 in the Maharashtra State of India.

“(1) The National Director may
by way of an ex
parte application
apply to a competent High Court for an order prohibiting any person,
subject to such conditions and exceptions as
may be specified in the
order, from dealing in any manner with any property to which the
order relates.

(2) A restraint order may be made—

(a) in respect of such realisable property as may be
specified in the restraint order and which is held by the person
against
whom the restraint order is being made;

(b) in respect of all realisable property held by such
person, whether it is specified in the restraint order or not;

(c) in respect of all property which, if it is
transferred to such person after the making of the restraint order,
would be realisable
property.”

“(1) A High Court may exercise
the powers conferred on it by section
26(1)—

(a) when—

(i) a prosecution for an offence has been instituted
against the defendant concerned;

(ii) either a confiscation order has been made against
that defendant or it appears to the court that there are reasonable
grounds
for believing that a confiscation order may be made against
that defendant; and

(iii) the proceedings against that defendant have not
been concluded; or

(b) when—

(i) that court is satisfied that a person is to be
charged with an offence; and

(ii) it appears to the court that there are reasonable
grounds for believing that a confiscation order may be made against
such
person.

(2) Where the High Court has made a
restraint order under subsection
(1)(b), that court shall rescind the restraint order if the
relevant person is not charged within such period as the court may
consider
reasonable.”

“A High Court making a
restraint order shall at the same time make an order authorising the
seizure of all movable property concerned
by a police official, and
any other ancillary orders that the court considers appropriate for
the proper, fair and effective
execution of the order.”

“For the purposes of this
Chapter, the proceedings contemplated in terms of this Chapter
against a defendant shall be concluded
when—

(a) the defendant is acquitted or found not guilty of
an offence;

(b) subject to section 18(2), the court convicting the
defendant of an offence, sentences the defendant without making a
confiscation
order against him or her;

(c) the conviction in respect of an offence is set
aside on review or appeal; or

(d) the defendant satisfies the confiscation order made
against him or her.”

14Section
24A was inserted by section 3 of the POCA Amendment Act. It
provides:

“A restraint order and an
order authorising the seizure of the property concerned or other
ancillary order which is in force at
the time of any decision by the
court in relation to the making of a confiscation order, shall
remain in force pending the outcome
of any appeal against the
decision concerned.”

“To facilitate the provision
of evidence and the execution of sentences in criminal cases and the
confiscation and transfer of
the proceeds of crime between the
Republic and foreign States; and to provide for matters connected
therewith.”

17See
for example Chapter 2 on the mutual provision of evidence and
Chapter 3 on the mutual execution of sentences and compensatory
orders.

“(1) When the Director-General
receives a request for assistance in enforcing a foreign restraint
order in the Republic, he or
she may lodge with the registrar of a
division of the Supreme Court a certified copy of such order if he
or she is satisfied
that the order is not subject to any review or
appeal.

(2) The registrar with whom a
certified copy of a foreign restraint order is lodged in terms of
subsection
(1), shall register such order in respect of the property which
is specified therein.

(3) The registrar registering a foreign restraint order
shall forthwith give notice in writing to the person against whom
the
order has been made—

(a) that the order has been registered at the division
of the Supreme Court concerned; and

(b) that the said person may within the prescribed
period and in terms of the rules of court apply to that court for
the setting
aside of the registration of the order.

(4) (a) Where the person against
whom the foreign restraint order has been made is present in the
Republic, the notice contemplated
in subsection
(3) shall be served on such person in the prescribed manner.

(b) Where the said person is not present in the
Republic, he or she shall in the prescribed manner be informed of
the registration
of the foreign restraint order.”

“When any foreign restraint
order has been registered in terms of section 24, that order shall
have the effect of a restraint order
made by the division of the
Supreme Court at which it has been registered.”

“The registration of a foreign
restraint order in terms of section
24 shall, on the application of the person against whom the
order has been made, be set aside if the court at which the order
was
registered is satisfied—

(a) that the order was registered contrary to a
provision of this Act;

(b) that the court of the requesting State had no
jurisdiction in the matter;

(c) that the order is subject to review or appeal;

(d) that the enforcement of the order would be contrary
to the interests of justice; or

(e) that the sentence or order in support of which the
foreign restraint order was made, has been satisfied in full.”

22Section
39(2) of the Constitution of the Republic of South Africa, 1996
provides:

“When interpreting any
legislation, and when developing the common law or customary law,
every court, tribunal or forum must promote
the spirit, purport and
objects of the Bill of Rights.”

“No one may be deprived of
property except in terms of law of general application, and no law
may permit arbitrary deprivation
of property.”

24In
the Federal Republic of Germany prevention of organised crime and
criminal recovery of assets are not governed by one piece
of
legislation, but are rather found in separate pieces of legislation.
For the purposes of this case the relevant legislation
is: the Code
of Criminal Procedure (Strafprozessordnung
or StPO), the Criminal Code (Strafgesetzbuch orStGB), and the Code of Civil Procedure
(Zivilprozessordnung
or ZPO). The Criminal Code deals with the offences
related to organised crime, among other things, and forfeiture. This
case engages
sections 73 and 73a. The Code of Criminal Procedure
deals with the procedural rules. This case engages sections 111b(2)
and (5),
111d and 111e(1). The relevant provisions of the Code of
Civil Procedure are sections 917, 920(1), 923, 928, 930-2 and
934(1).

26Two
further ancillary orders were issued subsequent to the order issued
by Veldhuizen J. The first was issued on 26 June 2009
by Desai J who
allowed funds to be released for operational expenses. The second
was issued on 11 September 2009 by Louw J in
terms of section 28(1)
of POCA to appoint a curator bonis.

27More
specifically, according to the translation of the judgment of the
Regional Court, Mr Falk was convicted of “conspiracy
to
attempt to commit fraud coinciding with the offence of conspiracy to
misrepresent the financial affairs of a company in terms
of §
400 par. 1 No. 1 Companies Act, as well as conspiracy to misstate
information relating to a company in its annual financial
statement”. The Federal Court, in its reasons, described the
offence as “attempted fraud in coincidence with false
representations in accordance with § 400 par. 1 of the German
Stock Corporation Act and with aiding and abetting false
representations of the circumstances of a company limited by shares
in its annual financial statement (§ 331 par. 1 no. 1
of the
Code of Commercial Law).”

“VI. The in
remattachment
is necessary for the preparation of the forfeiture of assets for
(the purpose of)compensation, or the
safeguarding of claims of damaged parties, as the case may be, as it
is otherwise to be feared that the enactment
at a later date of the
demand for payment by the Free and Hanse City of Hamburg, which is
derived from the forfeiture order,
or the claims of the damaged
parties, as the case may be, could be thwarted or seriously impeded
(§ 917
ZPO).

On [4 and 5 June 2003]the
accused had already, according to present findings, transferred
12.472 Millions of Euro from his bank to South Africa, to
extricate
them from the seizure by the criminal prosecution authority and the
alleged damaged parties. On [23 June 2004], the
day the decisions of
the constitutional court in this matter were proclaimed, moreover,
he had assigned all claims that he holds
against the Free and Hanse
City of Hamburg to his father-in-law Axel Schroeder.

There is concern that the accused will continue to
strive to stash away or to assign to Third Parties assets to which
he is entitled,
in order to thwart the execution of the claims which
the state or the damaged parties have on him.” (Certified
translation.)

49Section
167(3)(b) of the Constitution states that this Court has
jurisdiction to hear only constitutional matters, and issues
connected with decisions on constitutional matters. What constitutes
a constitutional issue must be construed broadly and not
unnecessarily restrict this Court’s jurisdiction. See Fraser
above n 15 at paras 35-6.

51The
papers in question are: a founding affidavit by Mr Bruce Gaye
Morrison, dated 13 November 2003 by means of which the NDPP
first
instituted the proceedings for an interdictory order; a
supplementary affidavit by Mr Uwe Hitziger, dated 1 December 2003
on
which the NDPP based their application to amend their original
notice of motion to amend the preservation of property order
to be
applicable to €4.2 million of the €5.22 million in the
Standard Bank account; the English translation of the
second German
restraint order; the notice from the Registrar notifying the
applicants of the registration of the foreign restraint
order made
in terms of section 24 of ICCMA on 13 September 2004; the English
translations of the relevant statutory provisions
of the relevant
German statutes; and the applicants’ notice of leave to appeal
in the Supreme Court of Appeal.

52The
NDPP states that the papers concern: “an
attempt by FRSA’s farm manager Mr Louw to have FRSA wound up
by the [High Court]; the appointment
by the [High Court] of a
curator bonisfor
the South African property of [Mr] Falk; the purported cession by
[Mr] Falk of his loan account in FRSA to a Panamanian company;
the
further orders made by the [High Court] in connection with the
curatorship and the assets under curatorship; and the outcome
of the
appeals to the German Federal Court (Bundesgerichtshof)
by the Hamburg prosecutors and [Mr] Falk against the decisions taken
by the Hamburg Regional Court on 8 May 2008 at the conclusion
of the
criminal trial in the latter court.”

54In
South Africa, “in rem” means “an act or
proceeding, as it were, directed against ‘all the world’
or against whom so ever it
might concern”, according to
Dictionary of Legal Words and Phrases (looseleaf) vol 2
(Butterworths, Durban 2010) at I-41. See also Du Bois (ed) Wille’sPrinciples of South African Law 9 ed (Juta, Cape Town 2007)
at 428-34 with reference to Grotius 2.1.58. In English law, “in
rem” is described as “an act, proceeding or right
available against the world at large, as opposed to in personam”,
and also “a right of property”, according to Osborn’s
Concise Law Dictionary 9 ed (Sweet & Maxwell, London 2001)
at 202. In the United States, according to Black’s Law
Dictionary 8 ed (West, St Paul 2004) at 809, “in rem”
means “[i]nvolving or determining the status of a thing, and
therefore the rights of persons generally with respect
to that
thing”.

55The
registration of the foreign restraint order took place in September
2004, the interdictory order was granted in August 2005,
the
applicants initiated their application to challenge the interdictory
order in June 2008 and the applicants challenged the
validity of the
registration of the foreign restraint order only in their written
argument in this Court.

56Regulation
16 of the International Co-operation in Criminal Matters Act
Regulations, Government Gazette 18556 GN R6062, 19 December
1997.

60Generally,
the State can appeal in criminal proceedings on questions of law,
inadequate sentences and the granting of bail. The
State cannot
appeal on the merits of an acquittal. See Chapters 9 and 30-1 of the
Criminal Procedure Act 51 of 1977.

71This
Court has held that the word “shall” when used in
legislation is not always peremptory. See for example Mohunram
above n 15at
para 121. Additionally, the Supreme Court of Appeal has held that
the word “must” is predominately peremptory.
See for
example Minister of Environmental
Affairs and Tourism and Others v Pepper Bay Fishing (Pty) Ltd;
Minister for Environmental Affairs and
Others v Smith (Pty) Ltd2004 (1) SA 308 (SCA) at para 32.